Buying my freehold... considerations

john_s_2

I'm considering the implications of buying my freehold but know almost nothing about it. I've had a read through a couple of threads on here, and one of them pointed to this website:

http://www.lease-advice.org.uk/

which was quite useful. But I thought the good people on here might be able to point out some obvious things I need to consider. I should give some background:

I live in a flat, which is one of two in a converted (semi detached) house. The downstairs lessee has also shown an interest in this when I discussed it with him (I think we would both need to agree to buy?)

My lease was originally 125 years, and now has about 108 years left. My neighbour's might be about ten years less.

I pay £75 per year ground rent, but no service charges - both flats are responsible for the upkeep and insurance of the building - there are no common parts (except a path outside, which I own but over which my neighbour has right of way). I've never been certain who is responsible for the roof and foundations - our leases are a bit vague on this point (they look like they were typed out by a six year old, and photocopied by his younger brother). But we've always sorted such things out amicably. (But nonetheless... Another reason why I wouldn't mind buying the freehold and starting afresh.)

Our freeholder is a private individual. I have only spoken to her twice in the last 17 years. Seems a perfectly pleasant person.
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Buying the freehold seems the 'sensible' thing to do, but is it? I understand I can renew the lease whenever I want to. I just did the online calculation on the above website, and to get another 99 years (it estimates) would cost me £3000 or so. Obviously I don't need to worry about the length of the lease at the moment, but I have to admit - even if I live here the rest of my life - I would only need to do this once (assuming I'd want to pass something worthwhile on to anyone I leave behind).

So, is there any good reason why I should consider buying the freehold? Any idea at all how much this would cost? (What more information would I need to estimate this?)

The vagueness of my lease does worry me a bit - I was only 21 when I bought the flat. The only bit of the lease I raised with my solicitor was the bit about not being allowed to do anything "immoral". I asked for a definition (as it also said I couldn't do anything "illegal"; I wanted clarification of what wasn't illegal, but was - in a court of law - immoral). He never did answer that question. Fat lot of good he was.

Sorry, waffled on far too much. Any comments / advice / further sources of information most welcome. Thank you :-)

david29dpo

For piece of mind, i would buy the freehold. Not sure how you go about it but worth looking in to. I would think owning the freehold would help if you ever sold too.

beaujolais-nouveau

john_s wrote: »

I live in a flat, which is one of two in a converted (semi detached) house. The downstairs lessee has also shown an interest in this when I discussed it with him (I think we would both need to agree to buy?)

Yes - when there are only two flats, both lessees have to agree.

john_s wrote: »

I pay £75 per year ground rent, but no service charges - both flats are responsible for the upkeep and insurance of the building - there are no common parts (except a path outside, which I own but over which my neighbour has right of way). I've never been certain who is responsible for the roof and foundations - our leases are a bit vague on this point (they look like they were typed out by a six year old, and photocopied by his younger brother). But we've always sorted such things out amicably. (But nonetheless... Another reason why I wouldn't mind buying the freehold and starting afresh.)

You have a "defective" lease which is very unsatisfactory from your point of view as lessee. Eg you have all the hassle and expense of repairing the building, and the freeholder benefits at no cost to her. I think that, in theory, if you made a mistake the freeholder could sue for damages.

john_s wrote: »

Our freeholder is a private individual. I have only spoken to her twice in the last 17 years. Seems a perfectly pleasant person.

Only you can make the decision whether or not to enfranchise, and part of that decision will be affected by how cooperative or not your freeholder is when you tell her that you wish to enfranchise. She cannot refuse you but can make it very painful. At the moment, although the ground rent is low, you the lessees have all the expense and responsibility of maintaining and insuring the property - and the freeholder is the main beneficiary! She may be resistant to relinquishing that happy state of affairs.

john_s wrote: »

The vagueness of my lease does worry me a bit - I was only 21 when I bought the flat. The only bit of the lease I raised with my solicitor was the bit about not being allowed to do anything "immoral". I asked for a definition (as it also said I couldn't do anything "illegal"; I wanted clarification of what wasn't illegal, but was - in a court of law - immoral). He never did answer that question. Fat lot of good he was.

Your lease is a potential time bomb - fine until something goes wrong, or until/if you want to sell the flat (as leasehold). And "immoral" is not a defined term in your lease, so your solicitor could not have given you a satisfactory answer.

I have a defective lease, too. And the least defective bit in it is a clause about not being allowed to keep an animal of "any phylum" to which the freeholder objects. That means I could keep an orang utan, even if the freeholder objected to it. Whichever clever clogs drew up the lease was probably thinking of "genus".

I am mid-enfranchisement.

john_s_2

Crumbs, thanks for that! That's given me a lot to think about. I've always been quite happy being responsible for maintaining the building, as I'm not at the mercy of the what the freeholder charges for this by way of service charges. (I know such charges can be challenged if they are excessive but nonetheless, I have always liked to have control.)

I suppose the freeholder only benefits from me maintaining the building in the event that she can either occupy it or sell another lease on it. Not something I intend to happen (ie I'll ensure the lease doesn't expire, and that I don't break its T&Cs). But nonetheless, maybe I should think again about this.

But the vagueness of our leases is a cause of concern. As you say, everything has been fine so far, but the most we've had to do is replace some flashing round the chimney and fix the occasional rainwater drainpipe. If we get subsidence then I can imagine my neighbour and I will not be so keen to go halves until we've established who's responsible for what!

Cheers for the "immoral" advice! I couldn't understand at the time (and still don't) why something that can't be defined is in a lease. But that's the least of my worries really. (Unless going to bed after midnight is considered immoral ;-)

It's a fair point you make that if I want to sell my lease then it could put off a buyer as it's so vague.

Is there anything I can do (assuming I don't buy the freehold) to have it tightened up? According to that site I mentioned, a lease can't be modified once it's entered into (fair enough). But is there any possibility of amending it to clarify anything that isn't clear? I would assume that both leases would require this - which would obviously mean my neighbour agreeing to go down this path.

Hmmm... thanks again.

beaujolais-nouveau

john_s wrote: »

But the vagueness of our leases is a cause of concern. As you say, everything has been fine so far, but the most we've had to do is replace some flashing round the chimney and fix the occasional rainwater drainpipe. If we get subsidence then I can imagine my neighbour and I will not be so keen to go halves until we've established who's responsible for what! ... It's a fair point you make that if I want to sell my lease then it could put off a buyer as it's so vague.

The main worry would be about attribution of "blame" if something went wrong. Say - as happened in the case of my flat and the flat downstairs - you make an insurance claim for subsidence and to fix an unsafe chimney. Insurance company sends loss adjuster who agrees the subsidence part of the claim but declines the bit about the chimney because, he tells you, it was due to a "failure of maintenance". In our case, repairing and maintenance are the responsibility of the freeholder; if it had been our responsibility, the freeholder could have sued us for neglecting his building.

Remember, any breach of the terms of the insurance policy voids the whole policy. Say, part of the building falls down - Heaven forbid - and the loss adjuster discovers that it was caused by some negligence on your part in the matter of maintaining the building. So the buildings insurance does not pay out, and how do you think your freeholder would react to finding that she had no funds to rebuild her property with? (Next door to where I live, the rear of the property has deteriorated so much that the professional advice by a surveyor in about 2001 was that the whole of the rear should be demolished and rebuilt. That hasn't been done because, first, it is the result of failure of maintenance so the insurance will not pay for it - if the current owners actually have any buildings insurance - and, secondly, the owners can't afford to do so.)

john_s wrote: »

Is there anything I can do (assuming I don't buy the freehold) to have it tightened up? According to that site I mentioned, a lease can't be modified once it's entered into (fair enough). But is there any possibility of amending it to clarify anything that isn't clear? I would assume that both leases would require this - which would obviously mean my neighbour agreeing to go down this path.

You can apply to the LVT any time to have the lease(s) varied - there is a procedure for this - to remedy the defects. But you would not be advised to do so without the help of a solicitor.

john_s_2

Thanks again for that advice. I might have misread the website I mentioned about varying the lease.

I would definitely involve a solicitor if I were to go down this road. (Which, by the sounds of it, is very advisable.)

Would my neighbour need to have his changed as well? If he's not bothered about it then I'd still like to do it on my own. I'm sure he'd be happy to give me a copy of his lease for reference (as I'm sure that would come in useful).

I like your 'worse case' scenarios. Not ;-)

Catti

john_s wrote: »

Thanks again for that advice. I might have misread the website I mentioned about varying the lease.

I would definitely involve a solicitor if I were to go down this road. (Which, by the sounds of it, is very advisable.)

Would my neighbour need to have his changed as well? If he's not bothered about it then I'd still like to do it on my own. I'm sure he'd be happy to give me a copy of his lease for reference (as I'm sure that would come in useful).

I like your 'worse case' scenarios. Not ;-)

If you were to be successful in acquiring your freehold, you could agree with your co-owner to do deeds of variation to update your leases to make them more appealing to a prospective purchaser in the future, and to get rid of ground rent as not much point in paying yourselves! You can do this anyway, but would have to involve the current freeholder and no doubt get stung for her costs and fees as well!

john_s_2

If you were to be successful in acquiring your freehold, you could agree with your co-owner to do deeds of variation to update your leases to make them more appealing to a prospective purchaser in the future, and to get rid of ground rent as not much point in paying yourselves! You can do this anyway, but would have to involve the current freeholder and no doubt get stung for her costs and fees as well!

Well, that's what I had in mind if I (we) do buy the freehold - that we would sort out new leases at the same time. (I'd assumed we'd have to!)

I suppose I could be tempted to waive the ground rent ;-)

I hadn't thought about being stung for the freeholder's costs if I do a variation but don't buy the freehold. But I guess that's inevitable. <sigh>

Is anyone able to give me a ballpark figure for how much buying the freehold would cost (aside from the legal costs)? I realise I'd need to provide more info, but I don't know what sort of info I'd need to provide. Is it likely to be massively more than the £3000 I mentioned for adding 99 years in my first post (my instinct is a massive "Yes it would!")

beaujolais-nouveau

john_s wrote: »

Is anyone able to give me a ballpark figure for how much buying the freehold would cost (aside from the legal costs)?

It is worked out to a formula which I think is on the LEASE web site. Make sure that it factors in the impact of the "Sportelli" decision

http://www.lease-advice.org/sportelliframe.htm

john_s_2

beaujolais-nouveau wrote: »

It is worked out to a formula which I think is on the LEASE web site.

http://www.lease-advice.org/sportelliframe.htm

Thanks! I looked at that last night. I need to look at it with a fresh pair of eyes. I suppose I was hoping for something a bit more 'ballparky'...

beaujolais-nouveau wrote: »

Make sure that it factors in the impact of the "Sportelli" decision

That reminds me of applying the Yates correction to a 2x2 Chi Square test from my A level stats days :-)

RandomDan

It is definitely worth getting together with your neighbour and sorting out the freehold through a solicitor.

I was in the same situation in a house divided into three flats. We all had defective leases and were warned this would have an impact on resale. One of my neighbours was more proactive than us lazy others and got the ball rolling on obtaining the freehold through a local solicitor. It did drag on for a couple of months and lots had to be signed but the result was shared ownership of the freehold, new 999yr leases issued to the three flats through our newly set up management company, one lot of buildings insurance instead of three seperate and a £10 a month mutually agreed direct debit into a fund to be used for the good of the building or emergencies. Oh, plus good relations with my neigbours.

I forget the cost but it was hundreds rather than thousands and well worth it in regards to potential resale and peace of mind.

Ours might be a bit different because we had an absentee/untracable owner of the freehold previously, and it was transferred to us.